Eimskip Overhauls Strategy Amidst Steep Decline in 2025 Earnings

REYKJAVIK, ICELAND – January 28, 2026 – Icelandic shipping and logistics firm Eimskipafelag Islands hf. is navigating turbulent waters after revealing a significant downturn in its 2025 financial performance, capping a year of formidable market challenges. The company reported a sharp 53% drop in fourth-quarter EBITDA and a substantial decline in full-year net earnings, prompting an aggressive strategic pivot that includes millions in cost-saving measures and the launch of a new corporate strategy, “Eimskip 3.0,” designed to stabilize the 112-year-old institution.

In its year-end report, the company detailed a challenging fourth quarter where revenue fell 11.4% to EUR 201.4 million compared to the same period in 2024. The impact on profitability was even more pronounced, with EBITDA plummeting to EUR 12.7 million from EUR 27.1 million a year prior. For the full year, net earnings fell to just EUR 9.3 million, a stark contrast to the EUR 30 million earned in 2024.

“The fourth quarter of 2025 remained challenging, consistent with recent quarters,” said CEO Vilhelm Már Thorsteinsson in the company’s announcement. He pointed to a confluence of negative factors, including “significant wage increases in recent years, rising supplier costs, and declining unit prices in the sailing system,” which the company was unable to fully pass on to its customers.

A Confluence of Global and Local Headwinds

Eimskip’s struggles in 2025 reflect a broader normalization and volatility within the global shipping industry after the unprecedented highs of the pandemic era. A substantial decline in global freight rates throughout the year squeezed margins in the company’s international forwarding segment. While the division delivered what the company termed “acceptable results,” it could not escape the effects of a cooling market.

Compounding the global pressure were specific, potent challenges within Eimskip’s core North Atlantic markets. A key driver of the volume decrease was a significant drop in exports from Iceland, primarily due to lower demand for industrial cargo. This downturn had a direct, negative impact on both liner volumes and port operations. Further complicating matters, limited cold storage availability in Europe created a bottleneck for Icelandic exports.

In a peculiar twist, imports to Iceland saw a substantial increase, driven almost entirely by a surge in vehicle imports ahead of year-end changes to vehicle taxes. This phenomenon, which mirrored a similar event at the end of 2023, created a temporary and lopsided trade flow that did not offset the losses from declining exports. Performance was also hampered in other key regions. In the Faroe Islands, exports of both frozen fish and pelagic species declined, while operational disruptions in the sailing system added to the difficulties. Meanwhile, in Norway, the company’s capacity was constrained as one of its four reefer vessels was docked for maintenance for the entire fourth quarter, directly impacting volumes.

Charting a New Course with 'Eimskip 3.0'

In response to the sustained pressure, Eimskip has embarked on a significant operational and strategic overhaul. During the autumn of 2025, the company initiated substantial cost-saving measures, including reductions in its vessel fleet, a restructuring of its sailing system, and a decrease in its workforce. These actions are already expected to deliver annual savings of EUR 13.5 million, with further initiatives underway targeting a total annual impact of EUR 15-17 million.

One of the most visible changes was the adjustment to coastal services in Iceland. The company transferred cargo previously carried by a dedicated coastal vessel to its domestic trucking network. According to the CEO, this transition has been successful, with customers responding well and service levels remaining strong. This move is part of a broader effort to improve efficiency, which also saw the closure of three operating locations.

Beyond immediate cost-cutting, the company has formalized its long-term vision with the new “Eimskip 3.0” strategy. Developed with extensive input from employees across its global network, the strategy is built on four pillars: customer-centric services, operational efficiency, empowering people, and innovation through automation. Its stated mission is to provide reliable and sustainable transportation solutions, reinforcing the company’s vital role in the communities it serves.

“For more than 112 years, Eimskip has been a vital contributor to value creation in the communities we serve,” Thorsteinsson stated. “With Eimskip 3.0, we take the next step with a clear vision: to connect communities and deliver prosperity for people and businesses where we operate.”

Financial Standing and Investor Outlook

Despite the sharp drop in earnings, Eimskip's financial foundation remains a key focus. The company's leverage ratio rose to 3.17 by the end of 2025, moving outside its long-term target range of 2-3. This reflects the impact of lower cash flow and increased debt relative to earnings. However, its equity ratio remained robust at 46.7%, comfortably above its target of approximately 40%, providing a solid capital base.

The company's leadership is framing the current challenges as a period of transition and is projecting confidence in its ability to navigate the recovery. The combination of aggressive cost controls and a new, forward-looking strategy is intended to right the ship and improve performance in the coming quarters. Eimskip plans to present these results and its strategic outlook in more detail to investors and market participants at a meeting on January 29.

As Thorsteinsson concluded, “Although the fourth quarter presented challenges, the results demonstrate that Eimskip is built on a strong foundation, supported by a skilled workforce and a solid financial position, positioning it well to seize the opportunities ahead in 2026.”